Champagne and treats: Britons fight the Christmas COVID blues

By James Davey

LONDON (Reuters) - British shoppers nervous about the rapid spread of the Omicron coronavirus variant may have kept away from bars and restaurants this Christmas, but they made up for it at home, splashing out on champagne, upmarket food and sportswear.

Following a difficult 2020 that ended with restrictions being tightened again, Britons spent big in December 2021, with supermarkets and retailers of clothing and homewares reporting better than expected results so far.

"Customers really wanted to trade-up this year," Sainsbury's chief executive Simon Roberts told reporters on Wednesday, after Britain's second largest supermarket group upgraded its full-year profit outlook.

The chain saw its highest ever sales of champagne and sparkling wines, while sales of its "Taste the Difference" premium range of food and drink were up 13% over Christmas on a two-year basis.

Roberts' comments chimed with those of the British arms of German discounters Aldi and Lidl.

Aldi said on Monday its premium "Specially Selected" range notched up its highest ever sales in December, while it sold over 5.5 million bottles of champagne, sparkling wine and prosecco.

On Tuesday, Lidl reported sparkling wine sales in December up 24% year-on-year.

Market researcher Kantar estimated that across the sector, some 627 million pounds ($855 million) was spent on supermarkets' own upmarket ranges in the four weeks to Dec. 26, up 6.8% on 2020.

AVAILABILITY

Sainsbury's Roberts said the group had "planned big."

"So on the key Christmas lines we bought volume substantially to reflect the fact that we thought customers would want to celebrate Christmas in a big way," he said, noting that groceries availability in the week before Christmas was "where we wanted it to be" despite supply chain challenges.

Sainsbury's general merchandise business, which includes the Argos chain, was hit by limited availability of technology, gaming and toys, which dented sales. However, a focus on more profitable sales boosted its profit margins.

That theme echoed comments from fashion retailer Next last week.

Next said its stock levels in the run up to Christmas were much lower than planned. But the strength of underlying consumer demand still enabled the group to beat its expectations and upgrade its annual profit forecast.

Similarly on Wednesday, sportswear retailer JD (NASDAQ:JD) Sports Fashion raised its profit outlook following strong Christmas sales, despite supply chain disruption for some of its key brand suppliers.

Homewares and furniture retailer Dunelm reported record sales, helped by shoppers buying festive items when in store, something they do not tend to do online.

Despite the upbeat mood there are still worrying signs on the horizon.

UK consumers are facing a cost of living crisis due to fast-rising inflation, surging energy bills and tax increases which could upset discretionary spending.

Kantar noted that December sales of indigestion remedies rose by 8%.

($1 = 0.7335 pounds)